UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-Q
                                   (Mark One)


        [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                OF THE SECURITIES EXCHANGE ACT OF 1934


               For the quarterly period ended September 30, 2001
                                       OR


       [ ]    TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15 (d)
              OF THE SECURITIES EXCHANGE ACT OF 1934


                For the transition period from ______ to ______

                           Commission File No. 0-20660


                              DIRECT INSITE CORP.
             (Exact name of registrant as specified in its charter)


           Delaware                                11-2895590
(State or other jurisdiction of                 (I.R.S. Employer
 incorporation or organization)                  Identification  No.)


80 Orville Drive, Bohemia, N.Y.                      11716
(Address of principal executive offices)           (Zip Code)


Registrant's telephone number, including area code      (631) 244-1500



Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.


                    Yes     [X]               No [ ]


The number of shares of $.0001 par value stock  outstanding  as of November  15,
2001 was: 2,108,504

<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES


                                     INDEX

PART I - FINANCIAL INFORMATION                                              Page

  Condensed Consolidated Balance Sheets as of September 30, 2001 and
   December 31, 2000                                                           3

  Condensed Consolidated Statements of Operations and Comprehensive Income
   For the Three and Nine Months Ended September 30, 2001 and 2000             4

  Condensed Consolidated Statements of Cash Flows
   For the Nine Months ended September 30, 2001 and 2000                       5

  Notes to Condensed Consolidated Financial Statements                    6 - 15

  Management's Discussion and Analysis of Financial Condition and
   Results of Operations                                                 16 - 21

  Quantitative and Qualitative Disclosure About Market Risk --
   Not Applicable

PART II  OTHER INFORMATION

  Item 1. Legal Proceedings                                                   22

  Item 2. Changes in Securities                                               22

  Item 3. Defaults Upon Senior Securities                                     22

  Item 4. Submission of Matters to a Vote of Security Holders                 22

  Item 5. Other Information                                                   22

  Item 6. Exhibits and Reports on Form 8-K                                    22

  Signatures                                                                  23

<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                 AS OF SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
                        (In thousands, except share data)

<TABLE>
<CAPTION>

                                                                                 September 30,       December 31,
                                                                                     2001                2000
                                                                           --------------------   ---------------
                                                                                 (Unaudited)          (Audited)
<S>                                                                            <C>                  <C>

ASSETS
Current assets
    Cash and cash equivalents                                                   $         476        $     10,851
    Accounts receivable, net of allowance for sales returns and doubtful
       accounts of $26 and $70 in 2001 and 2000, respectively                             925                 260
    Prepaid expenses and other current assets                                             350                 451
    Investment in NetWolves Corporation                                                 3,875               4,922
                                                                                -------------        ------------
       Total current assets                                                             5,626              16,484

Intangible assets, net of accumulated
    amortization of $24 in 2001                                                           560                 -
Property and equipment, net                                                             1,325               1,140
Other assets                                                                            1,101                 629
                                                                                -------------        ------------
                                                                                $       8,612        $     18,253
                                                                                =============        ============
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
    Accounts payable and accrued expenses                                       $       2,168        $      1,715
    Restructuring costs payable, current portion                                          330               1,526
    Current portion of long-term debt                                                     264                 -
    Convertible debentures, net of discount of $305 in 2000                               -                 2,695
    Income taxes payable                                                                   52                 855
                                                                                -------------        ------------
       Total current liabilities                                                        2,814               6,791

Long term debt, net of current portion                                                     22                 -
Restructuring costs payable, long-term                                                    533                 924
                                                                                -------------        ------------
       Total liabilities                                                                3,369               7,715
                                                                                -------------        ------------
Commitments and contingencies

Shareholders' equity
    Common stock, $.0001 par value; 150,000,000 shares authorized;
       2,179,542 and 1,449,833 shares issued in 2001 and 2000,
       respectively; and 2,108,504 and 1,425,462 shares outstanding
       in 2001 and 2000, respectively                                                     -                   -
    Additional paid-in capital                                                        104,268             103,569
    Unearned compensation                                                                 (14)               (115)
    Accumulated deficit                                                               (95,688)            (89,502)
    Accumulated other comprehensive loss                                               (2,995)             (3,086)
                                                                                -------------        ------------
                                                                                        5,571              10,866
    Common stock in treasury, at cost  - 24,371 shares                                   (328)               (328)
                                                                                -------------        ------------
       Total shareholders' equity                                                       5,243              10,538
                                                                                -------------        ------------
                                                                                $       8,612        $     18,253
                                                                                =============        ============
</TABLE>

See notes to condensed consolidated financial statements.

                                       3

<PAGE>


                      DIRECT INSITE CORP. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED STATEMENTS OF
                       OPERATIONS AND COMPREHENSIVE INCOME
                                   (Unaudited)

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 and 2000
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                      Three Months Ended                     Nine Months Ended
                                                      ------------------                     -----------------
                                                         September 30,                         September 30,
                                                         -------------                         -------------
                                                     2001             2000                2001              2000
                                              ---------------  ---------------     ---------------   ---------------
<S>                                           <C>              <C>                 <C>              <C>

Revenue                                       $         1,153  $           557     $         2,348   $         1,583

Cost of revenue                                           306               64                 552               242
                                              ---------------  ---------------     ---------------   ---------------
Gross margin                                              847              493               1,796             1,341
                                              ---------------  ---------------     ---------------   ---------------
Operating expenses
    Research and development                              757              380               2,094             3,840
    Sales and marketing                                   570              344               1,692             4,133
    General and administrative                          1,074              794               3,054             4,571
    Amortization and depreciation                         229              218                 707               652
    Non-recurring restructuring charge                     -                81                  -             15,086
                                              ---------------  ---------------     ---------------   ---------------
                                                        2,630            1,817               7,547            28,282
                                              ---------------  ---------------     ---------------   ---------------
Operating loss                                         (1,783)          (1,324)             (5,751)          (26,941)

Other income (expenses)
    Gain on sale of Softworks                             -                -                   -              47,813
    Gain on sale of ComputerCOP
       assets held for sale                               -                -                   -               8,534
    Loss on sales of NetWolves
       common stock                                       -                -                   (98)              -
    Interest income (expense), net                        (17)             131                (324)              675
    Other income                                           33              -                    33               -
                                              ---------------  ---------------     ---------------   ---------------
(Loss) income before (provision for)
       benefit from income taxes                       (1,767)          (1,193)             (6,140)           30,081
Benefit from (provision for) income
       taxes                                              -                379                 (46)          (12,048)
                                              ---------------  ---------------     ---------------   ---------------
Net (loss) income                             $        (1,767) $          (814)    $        (6,186)  $        18,033
                                              ===============  ===============     ===============   ===============
Other comprehensive income (loss)
    Unrealized (loss) gain on marketable
       securities                                      (1,229)          (3,870)                 91           (22,520)
                                              ---------------  ---------------     ---------------   ---------------
Comprehensive (loss) income                   $        (2,996) $        (4,684)    $        (6,095)  $        (4,487)
                                              ===============  ===============     ===============   ===============
Basic net (loss) income per share             $         (0.90) $         (0.56)    $         (3.69)  $         12.60
                                              ===============  ===============     ===============   ===============
Diluted net (loss) income per share           $         (0.90) $         (0.56)    $         (3.69)   $        12.36
                                              ===============  ===============     ===============   ===============
Basic weighted average common
    shares outstanding                                  1,953            1,462               1,678             1,431
                                              ===============  ===============     ===============   ===============
Diluted weighted average common
    shares outstanding                                  1,953            1,462               1,678             1,459
                                              ===============  ===============     ===============   ===============
</TABLE>
See notes to condensed consolidated financial statements.

                                       4
<PAGE>


                      DIRECT INSITE CORP. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                    For the nine months ended
                                                                                          September 30,
                                                                                   ---------------------------
                                                                                      2001              2000
                                                                                   ------------  -----------
                                                                                         (In thousands)
<S>                                                                                  <C>               <C>
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
Cash flows from operating activities
    Net (loss) income                                                                $(6,186)          $18,033
    Adjustments to reconcile net (loss) income to net cash used in
      operating activities
       Depreciation and amortization
          Property and equipment                                                         700               663
          Excess of cost over fair value of net assets acquired                           24               -
          Bond discount                                                                  -                   9
          Other                                                                            2                 2
       Non-cash interest charge pertaining to the discount on
          convertible debentures and loss on prepayment                                  346               -
       Provision for doubtful accounts                                                    36                27
       Loss on sales of NetWolves common stock                                            98               -
       Deferred income taxes                                                             -               9,197
       Common stock and options issued for services                                      393             2,554
       Common stock issued for settlement of restructuring charges                       183             1,180
       NetWolves common stock issued for services and for
         settlement of restructuring charges                                             -               2,000
       Gain on sale of Softworks and ComputerCOP                                         -             (56,347)
    Changes in operating assets and liabilities
       Accounts receivable                                                              (613)              184
       Prepaid expenses and other current assets                                         140               534
       Assets held for sale - ComputerCOP                                                -                 (18)
       Cash held in escrow                                                               -                (214)
       Other assets                                                                       28              (388)
       Accounts payable and accrued expenses                                             247            (4,193)
       Restructuring costs payable                                                    (1,404)            2,784
       Income taxes payable                                                             (802)            2,820
       Deferred revenue                                                                  -                 (31)
                                                                                     -------           -------
              Net cash used in operating activities                                   (6,808)          (21,204)
                                                                                     -------           -------
Cash flows from investing activities
    Cash received from the acquisition of Platinum Communications                         15               -
    Proceeds from the sale of Softworks stock (net of $3,157 of expenses)                -              48,301
    Proceeds from the sale of NetWolves common stock                                   1,124               -
    Cash utilized in the ComputerCOP/NetWolves transaction
        (including $1,819 of expenses)                                                   -             (22,319)
    Investment in NetWolves Corporation                                                  -              (4,500)
    Consideration paid in Platinum Communications acquisition                           (123)              -
    Investment in non-marketable securities                                             (500)              -
    Capital expenditures                                                                (782)             (581)
    Repayment of officers' loans, net                                                    -                 899
                                                                                     -------           -------
              Net cash (used in) provided by investing activities                       (266)           21,800
                                                                                     -------           -------
Cash flows from financing activities
    Repayments of long-term debt                                                         (50)              -
    Proceeds from the sale of common stock                                               500               -
    Payment of dividend                                                                  -              (2,194)
    Proceeds from long term debt (net of $72 of financing costs)                         -               1,928
    Repayments of convertible debentures                                              (3,751)              -
                                                                                     -------           -------
             Net cash (used in) provided by financing activities                      (3,301)             (266)
                                                                                     -------           -------
Net (decrease) increase in cash and cash equivalents                                 (10,375)              330

Cash and cash equivalents, beginning of period                                        10,851             1,852
                                                                                     -------           -------
Cash and cash equivalents, end of period                                             $   476           $ 2,182
                                                                                     =======           =======
</TABLE>
See notes to condensed consolidated financial statements.

                                        5
<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

     FOR THE THREE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000



1    Interim financial information

     The condensed  consolidated balance sheet as of September 30, 2001, and the
     condensed  consolidated  statements of operations and comprehensive  income
     and cash flows for the periods ended September 30, 2001 and 2000, have been
     prepared by the Company without audit.  These interim financial  statements
     include all  adjustments,  consisting  only of normal  recurring  accruals,
     which  management  considers  necessary  for a  fair  presentation  of  the
     financial  statements.  The  results of  operations  for the three and nine
     months ended September 30, 2001, are not necessarily  indicative of results
     that may be expected for any other interim periods or for the full year.

     These  condensed  consolidated  financial  statements  should  be  read  in
     conjunction  with the consolidated  financial  statements and notes thereto
     for the year ended  December  31, 2000.  The  accounting  policies  used in
     preparing the condensed  consolidated  financial  statements are consistent
     with those  described  in the  December  31,  2000  consolidated  financial
     statements.

2    The Company

     At the Company's  special meeting of stockholders  held on May 4, 2001, the
     Company's shareholders granted the Board of Directors authority to effect a
     reverse stock split in a ratio of one-for-fifteen.  On that date, the Board
     of Directors  declared a one-for-fifteen  reverse stock split effective for
     shareholders  of record as of the close of  business  on May 7, 2001.  (See
     Note 4.)

     At the annual  shareholders'  meeting held in August 2000, the shareholders
     elected to change  the  corporate  name to Direct  Insite  Corp.  (formerly
     Computer  Concepts  Corp.) to better reflect the initiation of new business
     strategies.

     Direct Insite Corp. and subsidiaries  (the "Company")  operate primarily as
     an  Application  Service  Provider  (generally  referred to as an ASP, also
     referred to as the Server Farm)  providing high volume data  processing and
     analysis  tools  for  their  customers.   The  Company's  core  technology,
     d.b.Express,  is a management  information  tool providing  targeted access
     through the mining of large volumes of transactional  data. The Server Farm
     permits end users the ability to  visually  access and analyze  information
     through the Internet.  Data can be visually  presented  using the Company's
     patented data visualization technology. Additionally, in the fourth quarter
     2000, the Company  entered into a license  agreement that will enable it to
     add to its suite of  products  and  services,  a complete  Electronic  Bill
     Presentment  and Payment  ("EBPP"),  as well as an Internet  Customer  Care
     ("ICC") tool set.

     In May 2001,  the Company and Platinum  Communications,  Inc.  ("Platinum")
     completed  a  merger  under  an  Agreement  and  Plan  of  Merger  ("Merger
     Agreement").  Under the  Merger  Agreement,  a newly  formed  wholly  owned
     subsidiary of the Company  acquired all of the outstanding  common stock of
     Platinum.  Platinum  markets  proprietary  back office  software  solutions
     either  as  a  license  or  as  an  Application  Service  Provider  to  the
     telecommunications sector. (See Note 13)

     In  2000,   the  Company   began   offering  a  new   consulting   service,
     "Telecommunications   Solutions"  (also  marketed  under  the  name  Global
     Telecommunications Services or GTS). The primary function of the consulting
     service was to create cost savings for its  customers  through  effectively
     negotiating their telecommunications and network service provider contracts
     as well as reviewing  both past and future  communication  expenditures  to
     assure  compliance.  The Company combined this service with its Server Farm
     to  create a  unique,  powerful  detailed  customer  profile.  However,  in
     September,  2001, as a result of minimal  revenue  combined with increasing
     sales and marketing costs, the Company decided to significantly curtail the
     marketing efforts associated with this offering.


                                       6

<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

     FOR THE THREE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000




     The most significant  portion of the Company's  operations had historically
     been  conducted   through  one  of  its   subsidiaries,   Softworks,   Inc.
     ("Softworks").  Through  Softworks,  the Company  developed,  marketed  and
     supported systems management software products for corporate mainframe data
     centers.  Softworks was wholly owned by the Company  through June 29, 1998,
     and majority owned through March 31, 1999. On January 27, 2000, the Company
     sold its  remaining  interest  to EMC  Corporation  for  approximately  $61
     million in cash, before expenses (See Note 8)

     In June 1998, the Company completed an acquisition of software (and related
     sales and  marketing  rights)  which is designed  to provide  non  computer
     literate individuals (e.g. parents,  guardians,  schools, etc.) the ability
     to identify threats as well as objectionable material that may be viewed by
     users (e.g.  children) of a computer on the Internet.  The Company formed a
     wholly owned  subsidiary  and marketed  the acquired  technology  under the
     trade name, ComputerCOP. On February 14, 2000, the Company sold ComputerCOP
     Corp. to NetWolves Corporation ("NetWolves"). (See Note 8)

     During the period ended March 31, 2001,  the Company  adopted SFAS No. 133.
     SFAS No. 133 establishes  accounting and reporting standards for derivative
     instruments,  including certain  derivative  instruments  embedded in other
     contracts  (collectively  referred  to as  derivatives),  and  for  hedging
     activities.   This  Statement   requires  that  an  entity   recognize  all
     derivatives as either assets or  liabilities in the condensed  consolidated
     balance sheets and measure those  instruments at fair value. The accounting
     for  changes in the fair value of a  derivative  instrument  depends on its
     intended use and the resulting designation.  Implementation of SFAS No. 133
     did not  have  any  material  impact  on the  financial  statements  of the
     Company.

     In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
     No. 141,  "Business  Combinations,"  and SFAS No. 142,  "Goodwill and Other
     Intangible  Assets." SFAS No. 141 provides guidance on the accounting for a
     business combination at the date a business  combination is completed.  The
     statement  requires the use of the purchase  method of  accounting  for all
     business  combinations  initiated after June 30, 2001, thereby  eliminating
     use of the  pooling-of-interests  method. SFAS No. 142 provides guidance on
     how to account for goodwill and  intangible  assets after an acquisition is
     completed.  The most substantive  change is that goodwill will no longer be
     amortized,  but instead will be tested for  impairment  periodically.  This
     statement will apply to existing goodwill and intangible assets,  beginning
     in 2002.

     In  October  2001,  the FASB  issued  SFAS  No.  144,  "Accounting  for the
     Impairment or Disposal of Long- Lived  Assets".  SFAS No. 144 addresses the
     accounting  model  for  long-lived  assets  to be  disposed  of by sale and
     resulting   implementation  issues.  This  statement  requires  that  those
     long-lived assets be measured at the lower of carrying amount or fair value
     less  cost  to  sell,  whether  reported  in  continuing  operations  or in
     discontinued operations.  Therefore, discontinued operations will no longer
     be measured at net realizable value or include amounts for operating losses
     that have not yet occurred.  It also broadens the reporting of discontinued
     operations to include all components of an entity with  operations that can
     be  distinguished  from the rest of the entity and that will be  eliminated
     from the ongoing  operations of the entity in a disposal  transaction.  The
     Company will adopt SFAS No. 144 in 2002 and is still  evaluating the effect
     on the Company's financial position.

3    Restructuring

     The  restructuring  charge includes costs directly related to the Company's
     plan.  EITF No.  94-3 and SEC Staff  Accounting  Bulletin  No. 100  provide
     specific  requirements  as to appropriate  recognition of costs  associated
     with  employee  termination   benefits  and  other  exit  costs.   Employee
     termination costs are recognized when details of the severance arrangements
     are  communicated  to affected  employees  (all 53 employees  were actually
     terminated  in  March  2000).   Other  exit  costs  (such  as   contractual
     obligations) that are not associated with or that do not benefit activities

                                       7

<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

     FOR THE THREE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000



     that will be continued are  recognized at the date of commitment to an exit
     plan subject to certain  conditions.  Other costs  directly  related to the
     restructuring  that are not eligible for recognition at the commitment date
     are expensed as incurred. The activity in the restructuring accrual for the
     nine months ended September 30, 2001 is summarized below:

<TABLE>
<CAPTION>
                                                 Officer/Director
                                 Employee        retirement           Consulting     Operating
                                 terminations    packages             contracts      leases          Other         Total
                                 ------------    -----------------    ----------     ---------       -----         -----
<S>                              <C>              <C>                 <C>           <C>            <C>           <C>
Restructuring accrual,
   as of December 31, 2000       $   32,000       $   558,000         $1,113,000    $  217,000     $ 530,000     $2,450,000
Company stock
   Issuances                           -                 -              (133,000)         -          (50,000)      (183,000)

Cash expenditures,
   nine months ended
   September 30, 2001               (26,000)         (542,000)          (250,000)     (106,000)     (480,000)    (1,404,000)
                                ------------      ------------       ------------  ------------  ------------   ------------
Restructuring accrual,
   September 30, 2001           $    6,000        $    16,000         $  730,000   $   111,000     $     -       $  863,000
                                ============      ============      ============   ============  ============   ------------

</TABLE>

Of the total outstanding liability of $863,000, $533,000, is payable after one
year.

4    Shareholders' equity

     At the Company's  special meeting of stockholders  held on May 4, 2001, the
     Company's shareholders granted the Board of Directors authority to effect a
     reverse stock split in a ratio of one-for-fifteen.  On that date, the Board
     of Directors  declared a one-for-fifteen  reverse stock split effective for
     shareholders of record as of the close of business on May 7, 2001.  Holders
     of the common  stock have the right to receive  payment in cash for partial
     shares.  Common stock,  treasury stock and additional paid-in capital as of
     December 31, 2000 has been  restated to reflect  this split.  Par value and
     authorized  shares  remain  unchanged  at $0.0001 and  150,000,000  shares,
     respectively.  All  references to the number of common shares and per share
     amounts elsewhere in the condensed  consolidated  financial  statements and
     related  footnotes  have also been  restated  to reflect  the effect of the
     split for the periods presented.

     Also during May, the Board  approved the 2001 Stock  Option/Stock  Issuance
     Plan whereby  330,000 shares of its  authorized  but unissued  common stock
     were reserved.  The Plan is divided into two separate equity  programs:  an
     option grant program and a stock issuance  program.  Options  granted under
     the Plan are non-qualified stock options and the exercise price is the fair
     market  value of the  common  stock on the date of  grant.  Under the stock
     issuance  program,  the  purchase  price per share is fixed by the Board of
     Directors or committee but cannot be less than the fair market value of the
     common stock on the issuance  date. In the second quarter 2001, the Company
     granted  329,340  shares and options  pursuant to this plan included in the
     detail below.

     At the Company's annual meeting of stockholders held on September 17, 2001,
     the Company's  shareholders ratified the 2001-A Stock Option/Stock Issuance
     Plan whereby  600,000  shares of its  authorized but unissued or reacquired
     common stock were  reserved.  Similar to the 2001 Plan,  the 2001-A Plan is
     divided into two separate  equity  programs:  an option grant program and a
     stock issuance program. For a description of the structure and terms of the
     equity programs,  see the above description of the 2001 Stock  Option/Stock
     Issuance Plan. As of the date of this filing no shares or options have been
     granted.

     In September  2001,  the Board of Directors  approved a shareholder  rights
     plan under which  shareholders  of record as of August 28, 2001  received a
     right, upon the occurrence of a Triggering  Event, as defined,  to purchase

                                       8
<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

     FOR THE THREE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000



     one share of the  Company's  common  stock at an  exercise  price of $2.50,
     subject to  adjustment.  The rights  attached  to the shares  expire on the
     earlier  of (i) August  27,  2006 or (ii)  redemption  or  exchange  of the
     rights.  The rights  have  certain  anti-takeover  effects  and would cause
     substantial  dilution  to a person  who  attempts  to acquire  the  Company
     without the consent of the Board of Directors.

     During the quarter ended  September 30, 2001,  the Company  issued  257,035
     shares of its common stock as detailed below:

     --   Sold  212,766  shares of its common  stock at $2.35,  a premium to the
          quoted  market  price to the Chairman of the Board of Directors of the
          Company for $500,000.

     --   In lieu of cash,  the Company issued 17,065 shares of its common stock
          valued at $40,000  ($2.34) to its Board of Directors for  compensation
          for serving on various committees, and expenses.

     --   Issued  10,536  shares  of its  common  stock as  payment  of  certain
          consultant liabilities, valued at $20,000.

     --   Issued  16,668  shares  of its  common  stock  valued  at  $63,000  as
          settlement of a certain legal matter. (See Note 5)

     During the six months  ended June 30,  2001,  the  Company  issued  426,007
     shares of its common stock and also recorded  transactions  with respect to
     stock options in the second quarter, as detailed below:

     --   Issued  156,285  shares of its  common  stock as  payment  of  certain
          consultant liabilities, valued at $260,000.

     --   Issued  29,340  shares  of its  common  stock as  payment  of  certain
          director liabilities, valued at $49,000.

     --   Issued  109,715  shares of its  common  stock as  payment  of  certain
          restructuring liabilities, valued at $183,000.

     --   Issued 64,000 shares of its common stock as employee  bonuses,  valued
          at $105,000.

     --   Issued 66,667 shares of its common stock to the former shareholders of
          Platinum as part of the Merger  Agreement,  valued at  $137,000.  (See
          Note 13)

     --   Granted  257,000  options to  employees  for  services  rendered.  All
          options  are  exercisable  at $1.63 per share and expire  periodically
          from May 31, 2005 to December 31, 2005.  The options have an intrinsic
          value of zero and vest periodically from six to eighteen months.

     --   Granted  20,000  options to  employees  (the  former  shareholders  of
          Platinum) to purchase  shares of the  Company's  common stock  vesting
          over three  years,  with an exercise  price of $2.06,  the fair market
          value on the date of the grant. (See Note 13).


5    Legal matters

     In March 1995, an action was originally commenced against the Company and a
     number of  defendants  (Barbara  Merkens  v. Aval  Guarantee  Ltd.,  Walter
     Mennel,  J. Forror,  A.  Faehndreich-Braun,  T&M Consulting AG, M. Schmidt,
     E.G. Baltruschat and Computer Concepts Corp.; United States District Court,
     Eastern  District of New York).  In early 1997,  after a change in counsel,
     the  plaintiff  amended  the  complaint  for a second  time,  now naming as
     defendants  only the Company and three of its officers.  The second amended
     complaint  alleges that certain  third  parties,  unrelated to the Company,
     transferred certificates representing 66,667 shares of the Company's common
     stock to the plaintiff. The complaint further alleges that such shares were
     endorsed in blank by the third parties and became

                                       9

<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

     FOR THE THREE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000



     bearer  securities,  which were  negotiated  to the  plaintiff  by physical
     delivery.  The  certificates had not been legally acquired from the Company
     and the  Company  had  reported  the  certificates  to the  Securities  and
     Exchange Commission as stolen certificates.  Plaintiff requested validation
     of the transfer of the  certificates  and sought  damages of an unspecified
     amount,  consisting  of alleged  diminution  in market value of the subject
     shares from 1994 through the date of any judgment in the plaintiff's favor.
     The Company denied  plaintiff's  allegations and filed a motion for summary
     judgment. On or about November 8, 1999, the motion for summary judgment was
     granted in favor of the Company and its  officers.  However,  the plaintiff
     filed an appeal,  which was  contested  by the  Company.  During the fourth
     quarter of 2000 the parties  agreed,  subject to District Court approval to
     settle this matter for 16,668 shares of the  Company's  common  shares.  As
     such,  during the fourth  quarter of 2000 the  Company  accrued  $80,000 to
     cover the value of the shares plus estimated legal fees. In September, 2001
     the District Court, approved the settlement and the shares were issued.

     During 1999, the Company and certain officers  received  notification  that
     they had been named as  defendants  in a class  action  (case # CV 99 1046,
     Kassouf, et al v. Computer Concepts Corp., Daniel DelGiorno, Sr. and Daniel
     DelGiorno Jr., U.S. District Court,  Eastern District of New York) alleging
     violations  of  certain  securities  laws with  respect  to the  content of
     certain  Company  announcements.  On January 30, 2001,  the Court entered a
     judgment dismissing the suit. The time to file an appeal has expired.

     In August  of 1999,  the  Company  and its  directors  were  served  with a
     complaint  filed in the  Chancery  Court of  Delaware,  (New Castle  County
     Claude Nadef v. Daniel  DelGiorno,  et al and Computer  Concepts  Corp.  as
     Nominal Defendant;  C.A. No. 17376-NC).  This is a derivative action, which
     is action  brought by the plaintiff on behalf of the Company,  in which the
     Company, for technical reasons, was named as a nominal defendant along with
     the real defendants in interest,  Daniel DelGiorno,  Sr., Daniel DelGiorno,
     Jr.,  Russell  Pellicano,  Augustin  Medina,  all  former  members  of  the
     Company's  Board of Directors.  The plaintiffs  alleged that the individual
     defendants  breached their  respective  fiduciary  duties to the Company by
     awarding excess  compensation and was requesting a judgment in favor of the
     Company  for such  excess  compensation.  An  answer to the  complaint  was
     interposed,  denying the material allegations of the Complaint. On June 29,
     2001 this matter was  resolved  through the  issuance of a  Stipulation  of
     Dismissal, without prejudice.


6    Reclassifications

     Certain  reclassifications  have  been made to the  condensed  consolidated
     financial statements shown for the prior period in order to have it conform
     to the current period's classifications.


7    Segment information

     The  Company  and its  subsidiaries  previously  operated  in two  separate
     business segments,  computer software and professional  services.  With the
     sale of Softworks and ComputerCOP  (Note 8) and the completion of its major
     professional  services contract,  commencing in the quarter ended March 31,
     2000 the Company began operating in one business segment.

     Major customer

     For the three months ended September 30, 2001 and 2000, the Company had one
     major  customer  with revenue of $850,000 and $433,000 - 73.7% and 77.7% of
     total revenue,  respectively.  For the nine months ended September 30, 2001
     and 2000, the Company had one major customer with revenue of $1,868,000 and
     $1,238,000  - 79.6 % and 78.2% of total  revenue,  respectively.  The total
     amount  due from  this  customer  included  in  accountants  receivable  at
     September 30, 2001 was $708,000.

     Products

     The Company generates revenue from two revenue streams: the Server Farm and
     Integration/engineering fees. For the three and nine months ended September
     30,  2000,  revenue  was solely from the Sever Farm.  The  following  table
     summarizes  the revenue  generated from these two sources for the three and
     nine months ended September 30, 2001:

                                       10
<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

     FOR THE THREE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000


<TABLE>
<CAPTION>
                                        Three Months            Nine Months
                                           Ended                  Ended
                                     September 30, 2001      September 30, 2001
                                     ------------------      ------------------

<S>                                     <C>                     <C>
Server Farm                             $838,000                $1,923,000

Integration/engineering fees             315,000                   425,000
                                      ----------                ----------
                                      $1,153,000                $2,348,000
                                      ==========                ==========
</TABLE>

8    Dispositions

     ComputerCOP Corp.
     ----------------

     During  February 2000, the Company sold  ComputerCOP  Corp., a wholly owned
     subsidiary  with assets  consisting  primarily of $20.5 million and certain
     technology  to  NetWolves  in exchange  for  1,775,000  shares of NetWolves
     common  stock.  Additionally,  the Company  purchased  225,000  shares from
     certain  NetWolves  shareholders  for $4.5 million.  The sale resulted in a
     pre-tax gain of $8,534,000, net of $2,572,000 of expenses,  recorded in the
     first quarter of 2000. As part of the  restructure  plan of March 2000, the
     Company  exchanged  75,000 of these  shares.  Also during the three  months
     ended March 31,  2000,  25,000 were  exchanged  to settle legal fees to the
     Company's then general counsel, and 25,000 shares were issued as a bonus to
     an  executive  officer,  resulting  in a  balance  of  1,875,000  shares of
     NetWolves  common stock. All shares exchanged were valued at $20. (See Note
     12).

     Softworks, Inc.
     ---------------

     Prior to June 30,  1998,  Softworks  was a wholly owned  subsidiary  of the
     Company with 14,083,000 shares of common stock  outstanding.  Pursuant to a
     series of transactions including an initial public offering of Softworks in
     August  1998,  and a second  public  offering in June 1999,  the  Company's
     ownership in Softworks was reduced to 35%.

     Pursuant to a tender offer the Company sold its  remaining  35% interest in
     Softworks  (a  total  of  6,145,767  shares)  to EMC  Corporation  and  its
     subsidiary  ("EMC")  for  $10.00  per  share.  The  transaction,  which was
     completed in January 2000,  provided aggregate cash proceeds of $61,458,000
     and  resulted  in a  pre-tax  gain of  $47,813,000,  net of  $3,316,000  of
     expenses, recorded in the first quarter of 2000.


9    Income taxes

     The  Company  accounts  for  income  taxes  under  Statement  of  Financial
     Accounting  Standards No. 109,  "Accounting for Income Taxes" ("SFAS 109").
     SFAS 109 requires the  determination of deferred tax assets and liabilities
     based on the  differences  between the  financial  statement and income tax
     bases of assets and  liabilities,  using  enacted  tax rates.  SFAS  No.109
     requires  that the net  deferred  tax  asset  be  adjusted  by a  valuation
     allowance, if, based on the weight of available evidence, it is more likely
     than not that some portion or all of the net deferred tax asset will not be
     realized.

     As a result of the Company's sale of its remaining interest in Softworks in
     January 2000 and the sale of its  ComputerCOP  technology  in February 2000
     (Note 8), the Company  recognized  a taxable  gain in the first  quarter of
     2000 and utilized all of its then  estimated  available net operating  loss

                                       11

<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

     FOR THE THREE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000



     carryforwards.  The tax provision for the three months ended March 31, 2000
     was $12,812,000,  which consisted of deferred tax expense of $9,197,000 and
     current tax expense of $3,615,000. The Company's tax provision for the nine
     months ended September 30, 2001 consists of current tax expense of $46,000.


10   Earnings per share

     For the three and nine months ended September 30, 2001 and the three months
     ended  September 30, 2000,  outstanding  stock options,  warrants and other
     potential  stock  issuances have not been  considered in the computation of
     diluted  earnings  per share  amounts  since the effect of their  inclusion
     would be  antidilutive.  For the nine months ended  September 30, 2000, the
     Company's  dilutive  instruments  are "in the  money"  stock  options  with
     various  exercise  dates and prices.  The Company uses the  treasury  stock
     method to calculate  the effect that the  conversion  of the stock  options
     would have on earnings per share  ("EPS").  The following  table sets forth
     the  computation  of  basic  and  diluted  EPS for the  nine  months  ended
     September 30, 2000 (in thousands, except per share data):

<TABLE>
<CAPTION>
        <S>                                         <C>
        Numerator:
          Net (loss) income                         $   18,033
                                                    ==========
        Denominator:
          Weighted average shares outstanding
         (Denominator for basic EPS)                     1,431
         Effect of dilutive securities
           Stock options                                    28
                                                    ----------
        Denominator for diluted EPS                      1,459
                                                    ==========

        Basic net (loss) income per share          $     12.60
        Diluted net (loss) income per share        $     12.36

</TABLE>


11   Convertible Debentures

     On  September  27, 2000,  the Company  entered into an agreement to sell an
     aggregate  principal  amount of $3,000,000 of Convertible  Debentures  (the
     "Debentures") bearing interest at a rate of 6% per annum, due September 27,
     2002. The Company sold the full amount of $3,000,000 of Debentures in 2000.

     The Debentures were  convertible  into shares of the Company's common stock
     beginning  February 25, 2001, subject to certain  limitations.  The Company
     had the right, exercisable at any time, to prepay all or any portion of the
     outstanding principal amount of the Debentures for which conversion notices
     had not  previously  been  delivered.  On January  30,  2001,  the  Company
     exercised  its  prepayment  rights and paid the  Holders  $3,700,000,  plus
     accrued interest.

     The Debentures  originally had a minimum  assured  discount of 18% from the
     fair value of the Company's  common stock,  as defined.  In connection with
     that discount,  the Company recorded debt discount of $658,000 upon receipt
     of $3,000,000 in funds and was  amortizing the discount over the period the
     Debentures  were  issued to the date they first  became  convertible.  As a
     result of the prepayment,  the discount,  which was originally  credited to
     additional  paid-in-capital,  was  reversed  in  the  first  quarter  2001,
     resulting  in a loss of  $185,000.  The  Company  recorded  total  interest
     charges of $751,000  ($353,000 in 2000 and $398,000 in 2001,  including the
     $185,000 loss).

                                       12
<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

     FOR THE THREE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000



12   Investments In Securities

     Non-Marketable
     --------------

     In  February  2001,  the  Company  acquired   2,000,000  shares  of  Voyant
     Corporation ("Voyant") through an equity investment of $500,000.  Voyant is
     a privately held company,  and accordingly,  the investment is reflected on
     the Company's balance sheet as a non-marketable security, which is included
     in "Other assets." The Company's Chairman is also the Chairman of Voyant.

     Marketable
     ----------

     As  discussed  in Note 8,  the  Company,  as of  December  31,  2000,  held
     1,875,000  shares of NetWolves  common stock.  During the nine month period
     ended  September  30, 2001,  the Company  sold  325,000  shares in the open
     market  at prices  ranging  from  $3.00 to $5.30  aggregating  proceeds  of
     approximately   $1,124,000.  At  September  30,  2001,  the  Company  owned
     1,550,000  shares of  NetWolves  common  stock with a quoted  market  value
     $3,875,000 ($2.50 per share).  The unrealized loss as of September 30, 2001
     was $2,970,000,  and has been included in "Accumulated other  comprehensive
     loss."

     NetWolves is an innovator of  firewall,  security and  all-in-one  Internet
     access devise systems, which is a trend in the Internet industry due to the
     enhanced  functionality  offered to end  users.  Their  primary  product is
     marketed  under  the  trade  name,   FoxBox.  In  addition  to  the  FoxBox
     appliances,  NetWolves has patent pending "Mother  System"  technology that
     offers worldwide  twenty-four hours per day, seven days per week, real-time
     monitoring and management of a complete network from one or many locations.


13   Investment In Platinum Communications, Inc.

     On May 10, 2001, the Company and Platinum Communications, Inc. ("Platinum")
     completed  a  merger  under  an  Agreement  and  Plan  of  Merger  ("Merger
     Agreement").  Under the  Merger  Agreement,  a newly  formed  wholly  owned
     subsidiary of the Company  acquired all of the outstanding  common stock of
     Platinum.  Platinum  markets  proprietary  back office  software  solutions
     either  as  a  license  or  as  an  Application  Service  Provider  to  the
     telecommunications sector.

     The purchase price of Platinum  approximated  $281,000,  which consisted of
     $50,000,  and 66,667 shares of common stock  (valued at $137,000,  based on
     the quoted  market  price at the time of the  acquisition)  and  $93,000 of
     acquisition  costs.  The Company issued an additional  46,667 shares of its
     common stock and placed it in escrow (not reflected as  outstanding  common
     stock),  that are to be released to the former  shareholders  of  Platinum,
     subject  to  certain  performance   provisions  (as  defined),  in  various
     increments  through April 2004. In addition,  two key employees of Platinum
     have entered into three-year  employment  agreements with the Company, with
     an  aggregate  base  compensation  of  $300,000  per annum and  options  to
     purchase  an  aggregate  of 20,000  shares of the  Company's  common  stock
     vesting over three years,  with an exercise price of $2.06, the fair market
     value  on the  date of the  grant.  Further,  as part of  their  employment
     agreements, the two key employees can, based upon achieving certain revenue
     thresholds,  earn up to an aggregate of a maximum of $1,000,000 in employee
     incentive bonuses.

     The  acquisition was accounted for as a purchase and,  accordingly,  assets
     and liabilities were fair valued at the date of acquisition and the results
     of operations are included in the consolidated  financial statements of the
     Company,  commencing  May 1,  2001.  Intangible  assets  (as  adjusted,  if
     necessary,  over a twelve  month period from the date of  acquisition)  are
     being  amortized by the  straight-line  method over a ten-year  period.  An
     allocation of the fair value of the assets acquired and liabilities assumed
     is as follows:

                                       13
<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

     FOR THE THREE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000



<TABLE>
<CAPTION>
        <S>                                                        <C>
        Purchase price
          Direct Insite common stock issued                        $   137,334
          Cash consideration                                            50,000
          Acquisition costs                                             93,266
                                                                   -----------
                                                                   $   280,600
                                                                   ===========
        Allocation of purchase price
          Fair value of tangible assets and liabilities
            Current assets                                         $   103,633
            Non-current assets                                         103,520
            Current liabilities                                       (385,409)
            Non-current liabilities                                   (125,520)
                                                                   -----------
                                                                      (303,776)
          Intangible assets acquired                                   584,376
                                                                   -----------
                                                                   $   280,600
                                                                   ===========
</TABLE>

     The following pro forma  financial  information has been prepared as if the
     acquisition of Platinum were consummated as of the beginning of each of the
     periods presented.  The pro forma information is not necessarily indicative
     of the combined results that would have occurred had the acquisition  taken
     place at the beginning of the period,  nor is it necessarily  indicative of
     the results that may occur in the future.  (In  thousands  except per share
     data):

<TABLE>
<CAPTION>

                      Nine months ended September 30, 2001

                                                    Actual        Pro Forma
                                                    ------        ---------

        <S>                                       <C>             <C>
        Revenue                                   $  2,348        $  2,575
        Expense                                      8,534           8,897
                                                  ---------       ---------

        Net loss                                  $ (6,186)       $ (6,322)
                                                  =========       =========

        Basic and diluted net loss per share      $  (3.69)       $  (3.70)
                                                  =========       =========
</TABLE>

<TABLE>
<CAPTION>
                      Nine months ended September 30, 2000

                                                    Actual        Pro Forma
                                                    ------        ---------
      <S>                                         <C>             <C>
      Revenue                                     $  1,583        $  2,624
      Expense                                       40,572          41,523
                                                  ---------       ---------
                                                   (38,989)        (38,899)
      Other income                                  57,022          57,020
                                                  ---------       ---------
      Net income                                  $ 18,033        $ 18,121
                                                  =========       =========

      Basic net income per share                  $  12.60        $  12.10
                                                  =========       =========

      Diluted net income per share                $  12.36        $  11.87
                                                  =========       =========
</TABLE>

                                       14
<PAGE>


                      DIRECT INSITE CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

     FOR THE THREE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000




14   Subsequent Events

     During  October  2001,  the Company  entered  into an  Accounts  Receivable
     Purchase  Agreement,  whereby the Company  from time to time may, on a full
     recourse  basis,  assign some of their accounts  receivable.  Upon specific
     invoice  approval,  an  advance  of  80% of the  underlying  receivable  is
     provided  to  the  Company.   The   remaining   balance   (20%),   less  an
     administrative  fee of  approximately  0.5% plus  interest at the rate of 1
     1/2% per month,  is paid to the Company once the  customer  has paid.  This
     agreement  expires  in October  2002.  During  October  2001,  the  Company
     assigned approximately $428,000 of its receivables to the lender.


15   Management's Plans

     For the nine-month  period ended September 30, 2001, the Company  continued
     to incur net losses  ($6,186,000)  and use  substantial  amounts of cash in
     operating  activities  ($6,808,000).  The Company  continued to finance its
     operations  with cash  generated from the sale of Softworks in 2000 as well
     as a partial  liquidation of its  investment in NetWolves.  As of September
     30,  2001,  the Company had a cash balance of $476,000 and the market value
     of its  investment in NetWolves was  $3,875,000.  The Company's  ability to
     generate additional cash from its NetWolves investment is subject to market
     volume and price fluctuations as well as certain  restrictions  pursuant to
     regulations  of  the  Securities  and  Exchange  Commission.  However,  the
     Company's management has and will continue to take numerous steps to create
     positive  cash flow for the Company.  Key  measures  include the March 2000
     restructure  plan,  expanding  the  Company's  products and  services,  and
     materially  improving  its sales  efforts  through  expanding its marketing
     staff.  As part of an expanded  agreement,  the Company has been performing
     services to assist International  Business Machines  Corporation's  ("IBM")
     with certain  tasks  associated  with IBM's efforts to create an electronic
     invoice  presentment and payment offering to their  customers.  The Company
     supplies  processing  services,  application  development,  consulting  and
     integration /  implementation  services  which support  electronic  invoice
     presentation  on  behalf  of IBM.  For the  three  and  nine  months  ended
     September 30, 2001,  integration and engineering  fees associated with this
     project were $315,000 and $425,000, respectively.  Management believes that
     revenue  generated from  implementation / engineering  should continue into
     2002.  The Company  expects that these  services are the precursor to added
     recurring   revenue  sources.   The  Company  has  also  acquired  Platinum
     Communications,  Inc.,  which  broadened the Company's  product  offerings.
     Management believes this acquisition  significantly  enhances the Company's
     current  market  strategy by allowing it to capitalize on the growing trend
     for outsource  services within the  communications  sector. The Company was
     unable to generate revenue from its GTS product offering.  Accordingly, the
     Company  significantly  curtailed  the  GTS  operations,  thereby  reducing
     associated  costs. As an additional  measure to reduce the Company's use of
     cash, a payroll rate reduction program was implemented effective October 1,
     2001 and is scheduled to remain in effect through March 31, 2002. This plan
     reduces  executive  compensation  20% with the  remainder of the work force
     incurring  a  10%  reduction.   Management  believes  that  its  plan  will
     ultimately  enable  the  Company  to  generate  positive  cash  flows  from
     operations.  Until such time, the Company believes that its present cash on
     hand, the liquidation of its investment in NetWolves,  as well as obtaining
     additional debt and/or equity  financing  should provide  adequate  funding
     through at least  September 30, 2002.  However,  there can be no assurances
     that the Company will have sufficient  funds to implement its current plan.
     In such an event, the Company would be forced to  significantly  reduce its
     operating expenses, which could have an adverse effect on future revenue.


                                       15

<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

                       MANAGEMENT DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000



Forward looking statements

All statements  other than  statements of historical  fact included in this Form
10-Q including,  without limitation,  statements under, "Management's Discussion
and Analysis of Financial  Condition  and Results of  Operations"  regarding the
Company's financial position,  business strategy and the plans and objectives of
management for future operations, are forward-looking  statements.  When used in
this Form 10-Q, words such as  "anticipate,"  "believe,"  "estimate,"  "expect,"
"intend"  and  similar  expressions,  as  they  relate  to  the  Company  or its
management, identify forward-looking statements. Such forward-looking statements
are based on the  beliefs of  management,  as well as  assumptions  made by, and
information  currently  available to, the Company's  management.  Actual results
could  differ  materially  from  those   contemplated  by  the   forward-looking
statements  as a  result  of  certain  factors  including  but not  limited  to,
fluctuations in future operating results, technological changes or difficulties,
management  of future  growth,  the risk of errors or failures in the  Company's
software products,  dependence on proprietary  technology,  competitive factors,
risks associated with potential  acquisitions,  the ability to recruit personnel
and the dependence on key personnel.  Such statements  reflect the current views
of  management  with respect to future events and are subject to these and other
risks,  uncertainties  and assumptions  relating to the  operations,  results of
operations, growth strategy and liquidity of the Company. All subsequent written
and oral  forward-looking  statements  attributable  to the  Company  or persons
acting  on its  behalf  are  expressly  qualified  in  their  entirety  by  this
paragraph.

Overview

Direct Insite Corp. and  subsidiaries  (the "Company")  operate  primarily as an
Application  Service Provider (generally referred to as an ASP, also referred to
as the Server Farm) providing high volume data processing and analysis tools for
their  customers.  The Company's core technology,  d.b.Express,  is a management
information  tool providing  targeted access through the mining of large volumes
of transactional data. The Server Farm permits end users the ability to visually
access and  analyze  information  through  the  Internet.  Data can be  visually
presented   using  the  Company's   patented  data   visualization   technology.
Additionally,  in the fourth  quarter 2000,  the Company  entered into a license
agreement  that will enable it to add to its suite of products and  services,  a
complete  Electronic  Bill  Presentment  and  Payment  ("EBPP"),  as  well as an
Internet Customer Care ("ICC") tool set.

In  May  2001,  the  Company  and  Platinum  Communications,  Inc.  ("Platinum")
completed a merger under an Agreement and Plan of Merger  ("Merger  Agreement").
Under the Merger  Agreement,  a newly  formed  wholly  owned  subsidiary  of the
Company  acquired all of the  outstanding  common  stock of  Platinum.  As such,
Platinum's financial data are included in the condensed  consolidated results of
operations  commencing  May  2001.  Platinum  markets  proprietary  back  office
software solutions either as a license or as an Application  Service Provider to
the telecommunications sector.

In   2000,   the   Company   began   offering   a   new   consulting    service,
"Telecommunications   Solutions"   (also   marketed   under   the  name   Global
Telecommunications  Services  or GTS).  The primary  function of the  consulting
service  was to  create  cost  savings  for its  customers  through  effectively
negotiating their  telecommunications  and network service provider contracts as
well as  reviewing  both past and future  communication  expenditures  to assure
compliance.  The Company  combined this service with its Server Farm to create a
unique,  powerful detailed customer  profile.  However,  in September 2001, as a
result of minimal revenue  combined with increasing  sales and marketing  costs,
the Company decided to significantly  curtail the marketing  efforts  associated
with this offering.

In the first quarter of 2000, the Company's Board of Directors  approved and the
Company  announced a  restructuring  plan that it believes would  streamline the
Company's  operations and reduce overhead.  As a result,  the Company recorded a
non-recurring restructuring charge of $15,176,000 in the year 2000.

In February 2000 the Company sold its subsidiary, ComputerCOP Corp. to NetWolves
for 1,775,000 shares of NetWolves common stock. (See Note 8).

                                       16
<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

                       MANAGEMENT DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000



The most significant  portion of the Company's  operations had historically been
conducted through one of its subsidiaries,  Softworks.  Through  Softworks,  the
Company developed,  marketed and supported systems management  software products
for corporate mainframe data centers.  Softworks was wholly owned by the Company
through June 29, 1998, and majority owned through March 31, 1999. On January 27,
2000, the Company sold its remaining interest to EMC Corporation (See Note 8).

Results of operations

During the nine-month  periods ending September 30, 2001 and 2000, the Company's
primary  source of revenue was generated  from the Server Farm.  During the nine
months ended  September 30, 2001,  revenue  within the Server Farm came from two
sources:  the Server Farm (d.b.Express) and Integration / Engineering fees ("I/E
fees").  As part of an  expanded  agreement,  the  Company  has been  performing
services to assist International  Business Machines  Corporation's  ("IBM") with
certain tasks  associated  with IBM's  efforts to create an  electronic  invoice
presentment  and payment  offering  to their  customers.  The  Company  supplies
processing  services,  application  development,  consulting  and  integration /
implementation  services which support electronic invoice presentation on behalf
of IBM. As part of this expanded agreement,  the Company was required to build a
fully redundant facility within an IBM co-location  center, the purpose of which
is to ensure  virtual  zero down  time.  For the  three  and nine  months  ended
September  30, 2001 I/E fees were  $315,000 or 27% and  $425,000 or 18% of total
revenue   respectively.   Management   believes  that  revenue   generated  from
implementation / engineering should continue into 2002. The Company expects that
these services are the precursor to added recurring revenue sources.

IBM is currently  the  Company's  largest  customer.  The Company  provides data
analysis and  reporting  services for IBM's  telecommunications  customers.  IBM
accounts for 73.7% of total revenue or $850,000 and $433,000,  or 77.7% of total
revenue for the three months ended  September  30, 2001 and 2000,  respectively,
and  $1,868,000,  or 79.6% and  $1,238,000  or 78.2% for the nine  months  ended
September 30, 2001 and 2000,  respectively.  Overall,  when  comparing the three
months  ended  September  30, 2001 to September  30,  2000,  Server Farm revenue
increased  $291,000,  or 53.2%,  to $838,000 from  $547,000.  For the nine month
period  ended  September  30,  2001,  when  compared to the same period in 2000,
Server Farm revenue increased $403,000, or 26.5%, to $1,923,000.

Additionally,  the Company is presently  determining costs and other barriers to
possibly enter and attract new specific markets / applications.

Included in total revenue for the three and nine month  periods ended  September
30, 2001, is $201,000 and $291,000, respectively, related to Platinum, which was
acquired  effective  May 1, 2001.  (See Note 13)  Included  in  revenue  for the
nine-month  period ended  September 30, 2000, is $35,000 related to ComputerCOP,
which was sold during the first quarter of 2000. (See Note 8)

For  the  nine  months  ended  September  30,  2001,  the  cost of  revenue  was
substantially  attributable  to the Server Farm and  Integration  fees. The most
significant  components  of Server  Farm cost of revenue  include  direct  labor
associated with processing call detail records,  Internet connectivity costs and
various  overhead  allocations  of  rent,  utilities  and  telephones.  For  the
nine-month period,  cost of revenue associated with the Server Farm increased to
23.5%  from  15.3%.  Similarly,  for the  three-month  period,  cost of  revenue
associated  with the Server Farm increased to 24.6% from 15.3%.  These increases
are  primarily  the result of the addition of the  co-location  facility.  Costs
associated with Integration / engineering fees consisted primarily of the direct
labor  attributable  to the  services  provided.  For  the  three  months  ended
September  30, 2001 costs were  approximately  $100,000  or 31.7%.  For the nine
months ended  September 30, 2000, in addition to Server Farm costs,  the Company
also incurred cost of revenue of $46,000  relating to  ComputerCOP.  There is no
depreciation included in cost of revenue.

                                       17
<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

                       MANAGEMENT DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000




Research  and  development  expenses  consist  primarily of salaries and related
costs (benefits,  travel, training) for developers, sales application engineers,
quality  control  /  quality  assurance  and  documentation  personnel.  It also
includes consultants as well as applicable overhead  allocations.  Overall, when
comparing  the  nine-month  periods  ended  September 30, 2001 and September 30,
2000, the Company reduced its research and  development  expenses by $1,746,000.
However,  included  in the nine  months  ended  September  30,  2000 were  costs
associated with the development of a multi-media  display  station.  Pursuant to
the  restructuring  plan put in place  during  March 2000,  the  Company  ceased
development  of the  multi-media  display  station.  As a  result,  there are no
expenses  attributable to this project in the first nine months of 2001, thereby
creating a reduction of $1,793,000 when compared the nine months ended September
30, 2000.  With respect to the Server  Farm,  the Company  continues to upgrade,
improve and enhance its current  products  and  services.  Further,  the Company
anticipates  releasing a new version of its core technology,  d.b.Express(TM) in
the near future.  It should be noted that when comparing the nine-month  periods
ended  September 30, 2001 and 2000, the Company  reduced its  development  costs
associated  to the Server  Farm by  $171,000.  When  comparing  the  three-month
periods ended September 30, 2001 and 2000, total research and development  costs
increased  $377,000  from  $380,000 to  $757,000.  The  acquisition  of Platinum
accounted for $97,000 of the increase,  and expenditures totaling  approximately
$280,000 relating to the development of the expanded services offering involving
EBPP and other internet applications accounted for the balance.

Sales and marketing  expenses include  salaries and related costs,  commissions,
travel,  facilities,  communications  costs  and  promotional  expenses  for the
Company's direct sales  organization  and marketing  staff.  Sales and marketing
expenses  decreased  $2,441,000 to $1,692,000  for the  nine-month  period ended
September 30, 2001,  when compared to $4,133,000 for the nine month period ended
September 30, 2000. The major factor for this decrease was the restructure plan,
which  included,  among other  items,  the  elimination  of $989,000  related to
consultants' fees, $243,000 reduction in travel and entertainment  expenses, and
$480,000 in reduced staffing levels.  Further,  as part of the restructure plan,
there was a reduction  of  expenses  of  $597,000  as a result of a  contractual
arrangement  wherein  the  Company no longer is  responsible  for the  marketing
efforts  relating  to the  multi-media  display  station.  The  Company has also
reduced by nearly $122,000 its advertising and promotional  costs. An additional
component of the reduction is the sale of ComputerCOP in the first quarter 2000,
which created a savings of $210,000. These reductions were offset by an increase
of $206,000 of expenses  attributable to the sales and marketing  efforts of the
Company's  GTS  offering  as well as $197,000 to the  Company's  newly  acquired
subsidiary,  Platinum.  However,  when comparing the  three-month  periods ended
September 30, 2001 and 2000, costs increased $226,000 from $344,000 to $570,000.
Expenses attributable to GTS and Platinum of $46,000 and $122,000, respectively,
contributed in part of this increase,  with the balance of approximately $58,000
attributable   to  increased   efforts  to  market  the  Company's   d.b.Express
technology.  It should be noted that sales and marketing costs associated to the
GTS product offering totaling $126,000 and $366,000 for the three and nine month
periods will not reoccur in future periods as a result of management's  decision
to significantly curtail the operations GTS.

General  and  administrative   expenses  include  administrative  and  executive
salaries and related benefits,  legal, accounting and other professional fees as
well as general corporate overhead.  Expenses decreased $1,517,000 to $3,054,000
for the nine-month  period ended  September 30, 2001, when compared to the nine-
month period  ended  September  30, 2000.  Major  factors  contributing  to this
decrease  include,  among other things,  staff  reductions of $839,000,  reduced
legal expenses of $433,000, reduced travel and entertainment of $144,000 and the
reduction  in  the  retention  of  financial  consultants  of  $240,000.   These
reductions were offset by an increase of $49,000 of expenses attributable to GTS
as well  as  $57,000  to the  Company's  newly  acquired  subsidiary,  Platinum.
However, when comparing the three-month period ended September 30, 2001 with the
same period ended September 30, 2000, costs increased  $280,000 from $794,000 to
$1,074,000.  Major factors  contributing to this increase  include,  among other
things,   $50,000  as  a  result  of  hiring  a  new  chief  executive  officer,
professional  fees of  $80,000,  increased  costs  associated  with the board of
directors  and  shareholders  meetings of $159,000,  and the  inclusion of costs
attributable  to  Platinum  of  $25,000,  offset by  decreases  in legal fees of
$21,000  and costs  associated  with GTS of  $24,000.  It  should be noted  that
general and administrative costs associated to the GTS product offering totaling
$26,000  and $98,000  for the three and nine month  periods  will not reoccur in
future periods as a result of management's decision to significantly curtail the
operations GTS.

                                       18
<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

                       MANAGEMENT DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000



Overall,  expenses  during the  three-month  period  ended  September  30,  2001
increased  compared to 2000.  However,  management  believes these increases are
necessary  in  order to  achieve  the  successful  implementation  of its  plan.
Wherever possible, costs saving measures are in place and management continually
scrutinizes all disbursements.

Amortization  and  depreciation  expenses  increased  $11,000 and  $55,000  when
comparing  the  three  and  nine-month  periods  ended  September  30,  2001 and
September 30, 2000, respectively.  The increase is primarily attributable to the
purchase  of  property  and  equipment   during  the   respective   periods  and
amortization of intangibles associated with Platinum.

Gain on sale of Softworks of $47,813,000  during the nine months ended September
30, 2000  represents the gain associated with a tender offering for the purchase
of  Softworks  common  stock made by EMC  Corporation,  which was  completed  on
January 27, 2000. (See Note 8).

Gain on sale of ComputerCOP  assets held for sale of $8,534,000  during the nine
months ended September 30, 2000 represents the gain associated with an agreement
dated February 10, 2000 for the sale of the ComputerCOP  subsidiary to NetWolves
Corporation. (See Note 8).

As discussed in Note 12,  through  September  2001 the Company sold or exchanged
325,000 shares of NetWolves common stock, resulting in a net loss of $98,000.

The Company's  tax  provision  for the nine months ended  September 30, 2001 was
$46,000.  As a  result  of the  Company's  sale  of its  remaining  interest  in
Softworks in January 2000 and the sale of its ComputerCOP technology in February
2000,  the Company  recognized a taxable  gain in the first  quarter of 2000 and
utilized all of its then estimated  available net operating loss  carryforwards.
The tax provision for the nine months ended September 30, 2000 was  $12,048,000,
which  consisted of deferred tax expense of $9,197,000 and a current tax expense
of $2,851,000.


                                       19

<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

                       MANAGEMENT DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000



Financial Condition and Liquidity

For the nine-month  period ended  September 30, 2001,  the Company  continued to
incur  operating  losses.  The  Company  used  substantial  amounts  of  cash in
operating  activities  during the nine months  ended  September  30,  2001.  The
Company continued to finance its operations from cash generated from the sale of
Softworks and from the partial  liquidation of its  investment in NetWolves.  In
late December 2000, the Company  received  $10,000,000,  which was being held in
escrow by EMC Corp as a condition to the sale in January  2000 of the  Company's
shares of  Softworks.  As discussed  in Note 11, the Company,  during the period
September  through December 2000, sold $3,000,000 of 6% Convertible  Debentures,
which was settled with a payment of $3,751,000 in January, 2001. As discussed in
Note 12, during 2001 the Company sold 325,000 shares of NetWolves,  resulting in
net proceeds of approximately $1,124,000.

As detailed in the Condensed  Consolidated  Statement of Cash Flows,  during the
nine month period ended September 30, 2001, the Company  utilized  $6,808,000 in
operating  activities,  which  includes,  among  other  items,  a  net  loss  of
$6,186,000  (offset by non-cash expenses totaling  $1,782,000),  $1,404,000 paid
toward the restructuring and income taxes paid of $802,000.

During the nine months ended September 30, 2001, the Company,  as a condition to
a recently  expanded  service  agreement with its major customer,  commenced the
establishment of a co-location facility by purchasing  approximately $750,000 of
additional  data  processing and Internet  connectivity  equipment.  In February
2001,  the Company made an equity  investment of $500,000  cash in Voyant.  (See
Note 12)

Management's current short-term plan is primarily focused on achieving operating
profit by successfully  marketing innovative software products and services that
capitalize on the Company's  patented  technologies.  To achieve its goals,  the
Company is continuing to take what it believes are the necessary  steps:

     1.   The  process  began in March  2000  when the  newly  elected  board of
          directors  and  management   implemented  a  restructure  plan,  which
          eliminated  unprofitable  business  units,  and reduced its  operating
          expenses, while continuing to market the Server Farm.

     2.   As part of an expanded  agreement,  the  Company  has been  performing
          services  to  assist  International  Business  Machines  Corporation's
          ("IBM") with certain tasks  associated with IBM's efforts to create an
          electronic   invoice   presentment  and  payment   offering  to  their
          customers.  The  Company  supplies  processing  services,  application
          development,  consulting  and  integration /  implementation  services
          which support  electronic  invoice  presentation on behalf of IBM. For
          the three and nine months ended  September 30, 2001,  integration  and
          engineering  fees  associated  with this  project  were  $315,000  and
          $425,000,  respectively.  Management  believes that revenue  generated
          from  implementation  / engineering  should  continue  into 2002.  The
          Company  expects  that  these  services  are the  precursor  to  added
          recurring revenue sources.

     3.   The  Company  was  unable to  generate  revenue  from its GTS  product
          offering.  Accordingly,  the Company  significantly  curtailed the GTS
          operations thereby reducing associated costs.

     4.   As an  additional  measure  to reduce  the  Company's  use of cash,  a
          payroll rate reduction  program was implemented  effective  October 1,
          2001 and is scheduled to remain in effect through March 31, 2002. This
          plan reduces executive compensation 20% with the remainder of the work
          force incurring a 10% reduction.

     5.   As  discussed  in Note 13 to these  Condensed  Consolidated  Financial
          Statements, the Company recently completed the acquisition of Platinum
          Communications,    Inc.,   a   provider   of   business-to-   business
          infrastructure   software   for  customer   management,   billing  and
          operations  for  telecommunications,   Internet  and  next  generation

                                       20

<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

                       MANAGEMENT DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000



     communications service providers. Platinum's products provide an integrated
     solution  based on a singular  database  strategy  serving all order entry,
     workflow  management,  provisioning,  rating and billing  requirements  for
     communications  service  providers.  The  acquisition  should  provide  the
     Company with  complementary  technology for d.b.Express  (TM), the existing
     high volume data  visualization,  and analysis  and EBPP toolset  currently
     being marketed to the  telecommunications  industry.  The Company  believes
     this  acquisition  will allow it to  capitalize  on the  growing  trend for
     outsource  services  within  the  communications   sector.   Further,   the
     acquisition  broadens the product  offering and completes the foundation of
     our current  market  strategy,  that is to focus on the  telecommunications
     market and expand our product / service  offerings,  specifically  aimed at
     becoming  a  leading  full  service  provider  for all back  office  system
     functionality.  Lastly,  the Company  intends to market its existing visual
     data analysis and EBPP product offerings to Platinum's established clients,
     as well as through their distribution channels.

Management  believes that its plan will ultimately enable the Company to achieve
positive cash flows from operations.  Until such time, the Company believes that
its present cash on hand, the  liquidation  of its  investment in NetWolves,  as
well as obtaining  additional debt and equity  financing should provide adequate
funding through at least September 30, 2002. However,  there can be no assurance
that the Company will have  sufficient  funds to implement  its current plan. In
such an event, the Company would be forced to significantly reduce its operating
expenses, which could have an adverse effect on future revenue.

The  Company  is deemed to be an  Affiliate  of  NetWolves.  As such,  there are
certain  restrictions  pursuant to  regulations  of the  Securities and Exchange
Commission that limit the amount of shares that the Company may sell in the open
market in a 90-day period. Should the Company be required to liquidate shares in
excess of the  permitted  quantities,  the Company may need to sell a portion of
its investment in private transactions. Private transactions would likely result
in sales at a discount to the quoted market price. As previously  noted,  during
the nine month period ended  September 30, 2001, the Company sold 325,000 shares
of NetWolves common stock resulting in net proceeds of approximately $1,124,000.
On October 31, 2001, the quoted market value of the 1,508,500  remaining  shares
of NetWolves common stock was approximately $3,485,000 ($2.31 per share).

NetWolves is an innovator of firewall,  security and all-in-one  Internet access
devise  systems,  which is a trend in the Internet  industry due to the enhanced
functionality  offered to end users. Their primary product is marketed under the
trade name, FoxBox. In addition to the FoxBox  appliances,  NetWolves has patent
pending "Mother System"  technology that offers worldwide  twenty-four hours per
day,  seven days per week,  real-time  monitoring  and  management of a complete
network from one or many locations.

In April 2000,  the  Company  entered  into a  contractual  arrangement  with an
unrelated  third party,  whereby the Company  transferred  all of its in-process
research and development  technology related to the multi- media display station
for the rights to 50% of the future profits (as defined), if any, from the third
party's operation or sale of this technology.  The third party agreed to utilize
its contacts in the industry and also agreed to fund all future costs associated
with the continued development and marketing of the display station. The Company
believes  that it is unlikely  that it will  recognize  any  proceeds  from this
transaction.


                                       21

<PAGE>

                      DIRECT INSITE CORP. AND SUBSIDIARIES

                           PART II OTHER INFORMATION

        FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000





Item 1. Legal Proceedings
        See Note 5 to the Financial Statements.

Item 2. Changes in Securities
        Not applicable.

Item 3. Defaults Upon Senior Securities
        Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

     The Company held its Annual Meeting of Stockholders on September 17, 2001.

     A.   Four  directors  were elected at the Annual Meeting to serve until the
          next Annual Meeting of  Stockholders  or until his successor is chosen
          and qualified. The names of these directors and votes cast in favor of
          their election and shares withheld are as follows:

<TABLE>
<CAPTION>

        Name                              Votes For               Votes Withheld
        ----                              ---------               --------------
        <S>                               <C>                          <C>
        James A. Cannavino                1,681,133                    66,398
        Charles Feld                      1,680,006                    65,266
        Dr. Dennis Murray                 1,680,005                    65,265
        Carla J. Stovall                  1,680,005                    65,265
</TABLE>

     B.   The Stockholders  approved a proposal to ratify the appointment by the
          Board  of  Directors  of  Marcum  &  Kliegman,  LLP as  the  Company's
          independent  certified public accountants for the year ending December
          31, 2001. 1,655,887 shares were voted in favor of the proposal, 22,356
          shares voted  against the proposal  and 2,890  shares  abstained  from
          voting.

     C.   The  Stockholders  approved  a  proposal  to ratify  and  approve  the
          Company's  2001-A Stock  Issuance  Plan.  582,980 shares were voted in
          favor of the  proposal,  94,468  shares voted against the proposal and
          6,739 shares abstained from voting.

Item 5. Other Information
        Not applicable.

Item 6. Exhibits and Reports on Form 8-K.

     Report on Form 8-K dated  August 28, 2001 - Item 5 Other Events and Item 7-
Financial  Statements,  Pro Forma Financial Information and Exhibits relating to
the Rights Agreement authorized by the Company's Board of Directors.

                                       22
<PAGE>



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


DIRECT INSITE CORP.


/s/ James Cannavino
--------------------------
James Cannavino                Chairman and Director       November 16, 2001



/s/ George Aronson
--------------------------
George Aronson                 Chief Financial Officer     November 16, 2001







                                       23